Knowledge economy ‘only solution’ to country’s woes

GROWING the knowledge economy will provide the long-term solution to Ireland’s economic problems, delegates at an accountants’ conference were told yesterday.

Producing higher added value in the traded services sectors is the exit route from the economic malaise, said Constantin Gurdgiev, an economist at Trinity College at the national conference of the Institute of Certified Public Accountants (CPA) in Maynooth.

Mr Gurdgiev warned, however, that we are far from being out of the crisis that has engulfed us since 2008 and we could face another eight years of falling asset values.

Asset bubble crashes can “last longer than our policies anticipate”, he said.

He dismissed reports of an imminent recovery, saying that since May of last year we have been told in several reports that the economy has been turning corners.

Mr Gurdgiev dismissed those claims as unfounded arguing that our combined Government and economy-wide debt is the worst of any of the other so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain) states. “The structure of our fiscal spending is working against us,” he said.

“Fiscally we have excessive structural deficits of 50%-60% of the total deficit and, courtesy of the banks we are now accumulating off balance sheet structural deficits.”

Ireland’s deficits are the worst of any of the troubled economies, he said.

The economy has other issues to deal with and he branded Ireland the least competitive in terms of labour costs.

“We haven’t been competitive since at least the mid-1990s,” he said.

On the other hand, Ireland does have a healthy exporting sector dominated by multinational companies, Mr Gurdgiev added.